In the auto industry, Korea is best known for its two brands, Hyundai and Kia. Starting off small, both have become famous brands specializing in building world-class cars like the Ioniq 5 and EV6.
Perhaps less well known is the third Korean car brand, SsangYong. Founded in 1954, SsangYong separates the difference between its Korean counterparts in terms of age, older than Hyundai but younger than its Kia counterpart.
However, with sales of less than 3000 last year in Australia – where it has a subsidiary operation – the brand is plagued by less well-known compatriots and the figure is thought to reflect a turbulent history. and its uncertain future.
History
With the country divided and its infrastructure devastated after the brutal Korean War, the 1950s were a particularly difficult decade for the people of South Korea.
The company today known as SsangYong was first established as Ha Dong-Hwan Motor Workshop shortly after this conflict ended. With scarce raw materials and resources, the company started its business by manufacturing buses and other commercial vehicles out of scrap metal from old oil drums, and powered by engines from abandoned military vehicles. abandoned America.
The company gradually grew over the next decade. 1966 made the company the first Korean vehicle manufacturer to export vehicles abroad when one of their buses, the HDH R-66, currently using a Nissan chassis, was sold in Brunei. , before being exported to Vietnam.
The remainder of the 1960s and 1970s saw the company cementing its position, continuing to build buses and tractors while also breaking into the passenger vehicle sector by assembling Jeeps domestically with partnership of the American automobile manufacturer American Motors Corporation (AMC).
This was followed by further investment in the passenger vehicle market, with the development of the Korando SUV derived from Jeep and the export of the vehicle to Japan.
However, the company was over-invested in its product line and, due to lack of funds, was acquired by cement manufacturer SsangYong Group in 1986, with all models produced thereafter being purchased. sold under the brand name SsangYong.
Newly rebranded and with raised funds, the company now known as SsangYong has ambitions for a global presence. But instead of developing the sales channels, dealers and technology needed to be competitive domestically, the company agreed to a technical cooperation with Mercedes-Benz in 1991.
At first glance, this seems like a win-win scenario for both companies, given the Korean brand’s access to Mercedes-Benz’s powertrain and related technology, as well as its distribution network. their global. Mercedes-Benz, in turn, will enjoy additional revenue from licensing and selling its technology to its Korean partner, and will have the option to use SsangYong products to fill any gaps in the system. its existing product line.
The first fruit of this partnership was the SsangYong Musso, an SUV offered through local Mercedes-Benz dealers since 1996 (but without such branding), and available with the engine. 3.2 liter gasoline with a capacity of 161kW or 2.9 liters. diesel engine with a capacity of only 70kW. Both engines can be mated to a four-speed automatic transmission borrowed from the Mercedes S-Class of the time.
Other Mercedes-Benz cars followed, including the Rexton and perhaps most notably the Chairman sedan, which is based on the Mercedes-Benz E-Class W124 platform but is about the same size (and style) with the larger S-Class.
Despite the technical partnership, the company’s financial position did not improve and successive transfers took place. First came to the Korean brand Daewoo in 1997, then sold it in 2000 when the financial situation deteriorated.
It was later acquired by Chinese giant SAIC in 2004. With an aging and still equally attractive lineup, sales continued to flat out. With the onset of the Global Financial Crisis, SAIC has been cutting costs and trying to reduce the company’s wage bill.
Tragically, this led to the death of an employee from a brain hemorrhage in 2009 after workers went on strike by barricading the inside of SsangYong’s main factory, and were subsequently denied food supplies. , drinking water and other drugs. SAIC has finally decided to sell its SsangYong business to Indian company Mahindra & Mahindra.
Ownership of Mahindra
SsangYong and Indian automaker Mahindra & Mahindra may be from different countries, but both share a history of producing commercial vehicles, 4x4s and SUVs as their core products.
It is this experience and expertise that the Indian brand thought would blend well with its existing model portfolio when it bought the Korean brand in 2011 for 523 billion won (approximately 500 million won). million dollars at current exchange rates).
However, unlike the Mercedes-Benz partnership, Mahindra has sought to use the Korean marque’s technology to its own benefit, with the initial desire to replicate the success experienced by rival Tata Motors. obtained with the purchase of Jaguar Land Rover (JLR).
Tata invested in JLR to boost sales relative to its German rivals, and Mahindra tried to form a similar company by turning SsangYong into a successful Hyundai rival, both in India and abroad. outside. Of course, ownership also means that the SsangYong platforms and technologies can form the basis for the next generation of vehicles sold directly under the Mahindra brand.
The problem with this approach is twofold. In India, image is important, brand reputation is everything. While Hyundai is a globally recognized name and has slowly built up India’s reputation as a manufacturer of quality, ‘affordable’ vehicles, SsangYong is known only to a limited extent in Korea and almost no one outside of it.
This is compounded by Mahindra’s retail strategy for SsangYong in India. Instead of separating it into a separate brand with unique dealers and premium sales channels, SsangYong vehicles have been relegated to a Mahindra sub-brand, with new models such as the Tivoli being sold as the Mahindra SsangYong Tivoli.
So Indian consumers don’t understand how Mahindra, a brand known for its agricultural vehicles, basic SUVs and three-wheeled auto rickshaws (tuk-tuks), was able to suddenly launch a more expensive line of ‘premium’ cars in the same dealership. .
To make matters worse, SsangYong products in India are sold alongside the next generation of Mahindra products (such as the XUV300) which itself is based on SsangYong’s platform, creating further confusion. .
With the motorcycle business burgeoning and other interests, Mahindra’s management and company resources were both stretched thin, and this led to other poor decisions such as not making a serious effort to enter the market. entering the US market, plus an unfinished product portfolio.
While models like the new Tivoli sold well in other markets like Europe (and helped the Korean company turn a net profit in 2016 for the first time in nine years), the remaining lines continued to operate. inefficient action. However, global sales in 2016 could reach 155,844 units.
While these numbers seem reasonable, the parent company Mahindra alone is not satisfied with the overall performance of the Korean subsidiary. Hindered by the COVID pandemic, they decided to sell SsangYong at the end of 2020.
Unsuccessful takeover by Edison Motors
In late 2021, SsangYong announced it had found a new buyer, namely a consortium led by electric bus maker Edison Motors, for AU$331 million. However, the deal fell through after the group failed to complete the payment to the company by the March 25, 2022 deadline.
Edison Motors has previously stated that its electric vehicle technology and know-how will allow SsangYong to rapidly transition from producing an internal combustion engine SUV to a range of electric vehicles.
As a result, the company is currently still mired in court proceedings. While SsangYong has stated that its intention is now to find another buyer, it may decide to declare bankruptcy instead; However, doing so will mean the company’s suppliers and suppliers will remain unpaid, thus potentially causing a ripple effect for the broader Korean auto industry. .
Alternatively, the Korean government may decide to join and nationalize the company through public funding.
Of course, whichever path the company chooses will have a significant impact on their future product line. Currently, SsangYong says it has completed the majority of development on the J100 electric SUV, which is likely to be the spiritual successor to the original Musso SUV and is expected to launch in June 2022.
It also intends to develop another electric vehicle, the U100, by the second quarter of 2023. The vehicle will use BYD’s blade batteries under license from the Chinese automaker. The company has also introduced a sturdy looking SUV codenamed KR10.
Previously, the company also had plans to build an electronic Musso car with a range of more than 500 km, but it is still unclear whether such a model will be produced after the failed Edison Motors takeover. .
